What are the differences between wood chips and pellets?

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Wood pellets are typically made from sawdust and chips that are a by product of lumber production. The wood chips are ground and dried to 8-10% moisture and extruded to make pellets that are 1/4” diameter and ~1” long. Pellets are typically made from 100% wood without additives. During pellet manufacture, heat and pressure melts the lignin in the wood which then acts as a binder to hold the pellet together. Although it takes energy to grind chips and to dry and extrude wood pellets, the total energy used is significantly less than to refine fossil fuels. The making of wood chips and wood pellets uses about 0.5% and 2% respectively of the total energy contained in the end fuel product. This is significantly better than fossil fuel energy sources where 10-12% of the energy contained in the fuel is used during the refining process. (Planning and Installing Bioenergy Systems: A Guide for Installers, Architects and Engineers, German Solar Energy Society, ECOFYS, 2005) The key advantages ...